Even with high inflation, a progressively weakening rupee and slower growth estimates, the venture capital industry in India continues to grow exponentially. Close to $1 billion worth of deals took place last year and about $340 million worth of deals have already been closed this year.
A research report by Deloitte released during a recent meet of the Venture Capital Association of India says VCs invested $158 million in just 26 deals between April- June this year. This includes new emerging fields such as film production, education and logistics this year.
Although IT and ITES still remain the most popular areas for investment with 60% of the deals taking place in the sector this year, others are gaining. 10% of deals were closed in healthcare. Infact, non-IT investments have climbed 40% according to the report.
“All consumer related businesses, the target wallet that a business would have, which is the growing disposable income with the growing connectivity that the Indian consumer have are the sectors we think we’ll see a lot of activity in,” says Kalpana Jain, senior partner at Deloitte Touche Tohmatsu.
The report says 68% of VCs feel the credit crunch has had no effect on the VC industry and 49% feel that the investments will increase this year. The report compares India and other emerging markets like Middle East, Eastern Europe, Brazil, South Korea and China. 47% of VCs feel China is more attractive compared to India while 32% feel it’s more attractive to invest here.
“More deals are getting done. That is largely driven by our economic growth and there will be many more people who will be interested in our economy and businesses,” said Jain.
Yet, if there are causes for concern its to do with infrastructure and bureaucratic red tape. But these are not significant enough to keep VCs away. The report suggests that for those that are yet to close their first deals in India the issue is not “if” but “when.”
Source: Livemint